CMS on Monday released a highly anticipated proposed rule for hospital outpatient departments (HOPDs) and ambulatory surgical centers (ASCs) for calendar year (CY) 2022.

Over the coming weeks, our team will continue to analyze the 863-page rule, so be sure to join us on Thursday, August 19 for an hour-long webinar breaking down everything you need to know. In the meantime, we've pulled out the most surprising proposals—including fines of up to $2 million for price transparency non-compliance—and what they mean for providers.

Aug. 19 Stay Up to Date: What the new outpatient and physician payment rules mean for health care

1. CMS proposes to halt IPO list elimination—but not the site of care shift

Perhaps the biggest surprise in this year's proposed rule is CMS' plan to halt the elimination of the Medicare Inpatient Only (IPO) list.

The backstory: CMS for years has been trying to migrate more and more care to outpatient settings, steadily identifying a handful or more procedures that it would take off of the IPO list each year. Then, last year, CMS finalized a much more dramatic proposal—over strong opposition from the American Hospital Association—that would eliminate the entire IPO list by 2024. In CY 2021, CMS removed 298 services from the IPO list under that policy.

Now, CMS is proposing not only to halt the elimination of the IPO list but also to add those 298 services back to the IPO list in CY 2022. The move is a major financial win for hospitals and health systems, which risked seeing lower payments per case as procedures moved to outpatient settings and potentially losing considerable volume if commercial insurers followed CMS' lead.

How will CMS' removal of the IPO list affect your hospital? Here's how to find out.

But hospitals and health systems would be remiss to view this policy change as the end of the story. Our analysis shows that the IPO list contains several procedures with more than 50,000 in annual case volume—including joint replacement, spinal fusion, and cardiac catheterization. CMS could still remove these from the IPO list in future rulemaking. In fact, providers should prepare for that scenario.

Overall, the rule suggest CMS is likely to continue its broader site of care shift push, albeit in a slower and more measured way.

2. CMS wants to crack down on hospitals that aren't providing price transparency

CMS also included another big policy change: ramping up enforcement efforts for hospital price transparency.

CMS said it is concerned by the high rate of noncompliance with the hospital price transparency final rule. This rule, which took effect on January 1, requires hospitals to publicly post their payer-specific prices.In an effort to increase compliance, CMS proposed increasing the financial penalties for noncompliance and tying those penalties to hospitals' bed count. CMS also included a request for comment on alternative ways to scale the penalties, such as tying them to revenue or the nature and scope of noncompliance.

If the rule is finalized as proposed, smaller hospitals (those with 30 or fewer beds) would continue to face the current maximum penalty of $300 per day, or $109,500 per year, for noncompliance. But beginning in CY 2022, larger hospitals (those with 550 or more beds) could face penalties as high as $2,007,500 if they were deemed noncompliant for the entire year—a price tag that could motivate more hospitals to comply with the rules. Since the penalties apply to individual hospitals, multi-hospital health systems stand to face even more exposure.

In addition, CMS also proposed changes to improve the accessibility of pricing data. For example, CMS proposed prohibiting hospitals from using "blocking codes" or other practices that make the data unsearchable on the internet. The agency also asked stakeholders to share other barriers to access that it should consider prohibiting in future rulemaking.

Radio Advisory: Transparency and surprise billing update

While the proposed rule as written likely won't immediately make pricing data more usable, it could free up policymakers and the media to focus on other, practical aspects of transparency. And if this is a signal of the Biden administration's larger philosophy toward transparency, health plans might be in store for significant penalties when their own disclosure requirements kick in next year—and plans' price disclosures could, in turn, have their own dramatic effects on price transparency.

3. CMS floats pandemic-driven telehealth changes—but doesn't commit

CMS said it is considering making permanent certain pandemic-related flexibilities, and it requested stakeholders' input on the ways in which providers have used telehealth to furnish mental health services to patients in their homes.

How to advance telehealth with evidence—not assumptions

The lack of any real proposals on telehealth is frankly both surprising and disappointing, especially at a time when so many providers are looking to CMS—and Congress—for clarity. Providers should use this request for comment as an opportunity to make their preferences and concerns known as CMS evaluates whether to extend (either permanently or temporarily) telehealth flexibilities put in place under the public health emergency.

4. CMS proposes a modest payment rate update

CMS' proposed rule would increase hospital outpatient and ambulatory surgical center payments by 2.3%. CMS estimates that total payments for outpatient providers will increase by $10.8 billion compared with CY 2021, for a total of $82.7 billion in CY 2022. CMS estimates that total payments to ASCs will decrease by $20 million compared with CY 2021, for a total of $5.2 billion.

As we saw in the inpatient proposed rule, CMS proposed using FY 2019 data instead of FY 2020 data to calculate payment rate changes for HOPDs and ASCs in light of the pandemic. That's because the agency expects CY 2022 outpatient service utilization to be more similar to utilization in CY 2019 than in CY 2020.

Other noteworthy proposals in the draft rule

The proposed rule included several proposals that, if finalized, would have big implications for providers, including:

• Maintaining the 340B payment rate of ASP minus 22.5%;
• Updates to the Radiation Oncology Model—stay tuned for more detailed updates on the RO Model;
• Requests for comment on eight new device pass-through payment applications;
• Request for comment on ways to incorporate equity measures into the Hospital Outpatient Quality Reporting (OQR) and Ambulatory Surgical Center Quality Reporting (ASCQR) Programs;
• Updates to OQR and ASCQR quality measures, including the adoption of a health care personnel Covid-19 vaccination measure; and
• Request for information on the new provider type—Rural Emergency Hospitals—created by the Consolidated Appropriations Act.

Reminder: This is still only a proposed rule

As always, this initial proposal is not yet finalized, and a wide range of outcomes is possible when the final rule arrives this fall.

We'll continue to provide additional commentary and analysis as we read through the proposed rule. Be sure to join our webinar on August 19 for a deep dive into the proposals.